Your Guide to Understanding PPC for Hotels and the Hospitality Industry in 2018

When was the last time you searched Google for a last-minute hotel deal or planned a family getaway to the beach? Chances are, you’ve noticed an increasing number of ads demanding your attention, and these aren’t slowing down anytime soon. For those of us in the hospitality industry, this means managing PPC for hotels has become more competitiveand more expensiveto attract guests to your website.

ppc for hotels

But first, what is PPC and what does it do? Pay-per-click, or PPC, is a form of marketing where advertisers pay a fee each time an ad is clicked, bringing a new visitor to their website. In the steps below, we will focus on the basics of Google AdWords to help you get started today!

PPC has become a popular option for hoteliers to increase traffic to their website. According to Search Engine Land, “Search spending in the US is expected to increase 24 percent over the next three years, from $36.69 billion in 2017 to $45.63 billion in 2019.” Many OTA’s (online travel agencies) are increasing their ad spending in 2018, at a time when Expedia and the Priceline Group are already two of Google’s top customers.

Whether you’re just getting started with Google AdWords, or you’re looking to improve your existing campaigns, don’t give up on your AdWords hotel strategy. Here are the common mistakes we see, as well as best practices to improve your PPC strategy in 2018.

 

Do Your Research!

Do you know which keywords your competitors currently bidding on, and which keywords are going to compliment your organic traffic? There are many tools that will help you understand what your competitors are doing in AdWords. Finding out which keywords are already working is an excellent way to start your marketing research! If your competitor down the street is bidding on certain keywords, it’s likely that the OTA’s are, too. A good AdWords strategy will allow your website to compete in this space and increase your direct bookings. Here are a few (free and paid) tools to help you get started:

At the very least, you should add your competitor’s website into Google’s Keyword Planner. There’s no need to overthink your keyword ideas initially. Simply enter a relevant URL into the planner to produce keyword suggestions. For example, after searching Google for “boutique hotel in charleston sc,” I came across Zero George Street. Adding this website to Keyword Planner generates keyword ideas for:

  • charleston sc hotels
  • zero george
  • boutique hotel
  • places to stay in charleston sc
  • best hotels in charleston sc
  • hotels in downtown charleston sc
  • charleston beach hotels
  • luxury hotels in charleston sc
  • And so on…

Keep a list of these keywords, the average cost-per-click, and the average search volume per month.

When selecting keywords for your AdWords campaign, keep searcher-intent in mind. Search for that term in Google to see what other results are showing before you start bidding on that keyword. For example, the keyword “zero george” might work well in this case to ensure guests find your boutique hotel at the top of the results, but if you search Google and find other results for a classic film with the same name, another business across the country with the same name, or any other results that are not related to your target market, then beware! These keywords can quickly drive up your AdWords cost while resulting in zero bookings.

Other things to consider when selecting keywords from competitors: what parts of your business are unique to you? What aspects of your hotel do guest love and tell you about in person? The keyword “charleston beach hotels” might be a great keyword for certain hotels (on the beach) and a very bad keyword for other hotels in the area. Bottom line: Stay true to your business, and don’t add keywords that will leave visitors disappointed when they’re on your website.

 

Branded Search vs. Destination Keywords

Should you bid on your own business name? This is a common question we see, and the answer might surprise you. When was the last time you did a Google search for your business name? As OTA’s spend more and more on AdWords, chances are, there’s an OTA already bidding on your name in order to “sell” your guest back to you for a commission. If this is the case, you can increase your direct bookings simply by bidding on your own name. Since it is your business and website, you should easily rank in the #1 position for a lower cost.

Tip to avoid: Yes, it’s true you can bid on a competitor’s business name in AdWords, but we wouldn’t recommend it. Competitor keywords usually have a higher cost-per-click (CPC) and a low ROI.

Now, with your competitor keyword research, you should have a list of about 20-30 destination keywords that match your target market. Try to select the most specific keywords, when possible—keywords that match closely with your niche.

 

Let’s Estimate Your ROI from AdWords Based on Your Keyword Research

To estimate your AdWords ROI, let’s first understand how much traffic you can expect from your keyword list (keep in mind that this is a rough estimate). Since Google is a competitive space, not everyone will click on your ad. In fact, a good click-through rate (CTR) for AdWords is between 5-10%, and the average across all industries is much lower (around 2%). Here is an average CTR in AdWords based on positions #1-5 in Google:

Average CTR (by position)Branded SearchLocation Based
#125%7%
#220%3.01%
#318%2.19%
#415%2.15%
#510%1.60%

 

Should your ads always be in the #1 position? It’s not likely, and for the most ROI, we wouldn’t recommend it. Your AdWords budget can actually reach more travelers by ranking in positions #2-4. Let’s estimate the amount of search traffic that you can expect from your keyword list if all of your ads were in the #2 position.

Using your destination/location based keywords, you can expect 3.01% of traffic to click on your ads and visit your website. Using the average search volume per month for each keyword, create a new column for “Estimated AdWords Traffic.” Multiply the average search volume by 3.01%.

Keyword:Search VolumeSuggested Bid
“hotels in downtown charleston sc”14,800/month$3.37

 

14,800 searches per month X 3.01% = ~ 445.5 clicks per month

With an average cost-per-click or suggested bid of $3.37, you would need to spend $1,501.27 per month to see that kind of traffic from this one keyword.

But don’t let that scare you! Remember that you can set a daily budget in AdWords so that you only spend as much as you can afford. And, if your ads are set up well, your cost-per-click should actually be lower than the average. You may find out you don’t actually need that much traffic to meet your revenue goals.

Let’s use these estimated numbers to calculate an estimated ROI:

  1. Log in to your Analytics account (you will need eCommerce tracking for these next steps).
  2. Select a date range of at least the past year.
  3. On the left, click “Acquisition > All Traffic > Channels”
  4. Looking at your website traffic by channel, the right side of the screen will display your eCommerce Conversions (online bookings).
  5. Look closely at your eCommerce Conversion Rate:

PPC for Hotels - eCommerce Conversion Rate

If this is your first AdWords campaign, then Organic Search is a good benchmark for an estimated conversion rate (in this case, 1.52%). Visitors from organic traffic likely found your website from a similar search (i.e. “places to stay in charleston” or “hotels in charleston,” etc.), landed on your website, liked what they saw, and booked. YES!

 

Now let’s see if we can repeat that process with AdWords to convert payed clicks into paying guests.

Using the estimated numbers from earlier, we saw an expected 445.5 website visits per month, for a cost of $1,501.27.

 

445.5 X 1.52% conversion rate = ~ 6.8 transactions.

 

Now, using your booking reports, calculate your average transaction value for the past year (this will vary depending on your location, room rate, and other factors).

For this example, let’s say that an average guest spends $456.18.

 

Note: This is not average room rate since many guests will book multiple nights.

 

6.8 transactions X $456.18 = $3,102.02.

 

If the cost for AdWords was $1,501.21, that’s a 107% ROI!

Repeat this process for your main keyword groups to have a better understanding of expected traffic and cost each month.

 

Important note: These numbers are only a rough estimate, and you will not know your exact CTR, CPC, or website traffic each month until after your AdWords campaign is running. Though the numbers are not exact, this exercise can help you understand how much demand there is for destination keywords in your area, and how much competition there is around you. Generally, more competition in your area means a higher CPC for each keyword, and in some cases, the ROI may not be high enough for you to bid on those keywords.

 

Still not sure if AdWords is right for you? We can help!

Please get in touch with one of our experts. We’re happy to answer any questions and help get your marketing on the right track!

To learn more, contact us at (843) 475-2962 for a free 30-minute consultation. Or, register for an upcoming webinar!